NMa warns that banks run risk with joint agreements on abandoning PIN
Today the Netherlands Competition Authority (NMa) presents its vision document on the introduction of the 'Single Euro Payments Area' (SEPA): Eén betaalmarkt: meer concurrentie? (A single payments market: increasing competition?). On the basis of an extensive market consultation the NMa predicts risks in the run-up to a single European payment market, which could restrict competition. The demand from consumers and shop owners should be a guiding principle for the course of this transitional period. Now, however, mainly banks – as providers of payment products – are putting their stamp on this phase. 'In doing so the parties involved are sending out the wrong signal by speculating at this early point about the end of PIN and an end date on which PIN may cease to exist as a means of payment,' says Pieter Kalbfleisch, chairman of the Board of the NMa.
At the beginning of this year the starting signal was given for a transitional period to a common European payment market, which is supposed to make it easier for consumers and businesses to make cross-border transactions with a checking account. SEPA is an initiative of the European Central Bank and the European Commission. The Dutch banks have worked with the Dutch Central Bank (De Nederlandsche Bank) and Currence (the owner of PIN) to draw up a plan for the transition to SEPA in the Netherlands. The NMa is a great supporter of a smoothly functioning European payment market, but wants to ensure that the agreements made in connection with this do not restrict competition. Collective agreements on prices, dividing up the market or limiting offerings are not permitted on the basis of the Competition Act. The NMa is therefore following the developments regarding SEPA very closely and will take action if necessary.
No joint agreements on payment products
'We have arrived at a crucial phase in giving form to future payment traffic,' says Pieter Kalbfleisch. 'SEPA offers opportunities for more competition in payment transactions but at the moment there is a danger of risks that may limit competition.' The NMa is particularly concerned about comments from banks that there will reportedly be no future for PIN in SEPA. PIN is one of the most efficient and inexpensive systems in Europe. 'From the perspective of competition it is therefore also undesirable that such a payment brand be abandoned now already, while it could compete on the Dutch market in any event with the international payment brands V-Pay and Maestro,' says Pieter Kalbfleisch. If banks now already start jointly speculating about the abandoning of PIN, they create a situation in which the competitive position of PIN is weakened in advance in comparison to the other payment products.
From the perspective of competition there is also a risk associated with setting end dates for the migration period. Kalbfleisch: 'It could be in violation of the Competition Act if banks jointly decide no longer to offer existing paymentproducts. After all, this implies that they are, as competitors, making agreements amongst themselves that have the effect of an arranged or limited offering of products. Such agreements can impede competition and can therefore be in violation of the Competition Act. The development of payment products that satisfy SEPA must be a demand-driven process, in which every bank must decide individually which products it wants to offer its customers.' Collective agreements about abandoning products are only permitted from the point of view of efficiency, for example if a large part of the market has changed over to new payment products. That is not the situation now however.
Stimulate entry of new parties
Although there are risks that competition could be limited, SEPA also offers opportunities for competition in payment transactions, says Kalbfleisch. It is nevertheless important that new parties get access to the technical standards. Only if this access is transparent, non-discriminatory and possible under reasonable conditions will new parties be encouraged to enter this market. It could pose a risk, however, if the current market parties are involved in this entry process. Kalfbfleisch: 'This must not lead to unreasonable conditions, which would in fact impede competition. We are therefore arguing that the assessment of entering parties not be charged to organisations whose impartiality is not guaranteed.'
The financial sector is one of the spearheads of the NMa. Via an extensive consultation over the past few months the NMa investigated whether the implementationprocess of SEPA poses any risks that could limit competition, as a result of which the consumer will not enjoy the intended benefits of SEPA. The NMa questioned various businesses, sector organisations, consumer organisations and academia about this. The results of the consultation are contained in the NMa's vision document, which is available at www.acm.nl.